Q&A Forum

Why do businesses reimburse for travel meals?

A question I've often wondered, but never asked: why are businesses expected to pay for meals when employees travel? What is the logic involved? If I work from the office, I am either bringing my lunch or going out and buying it. So, why should the business pay just because I don't happen to be in the office that day?

Answers

My number 1 reason......You don't want to nickel and dime your employees. (....but sadly a lot of businesses/companies do). When all is said and done, morale/motivation/loyalty/culture is COSTLIER than the nickel and dime you will save.
2. You are sending the employee out of his normal day/office activity...and away from home/family. He/She is only travelling to help the company.
3. Your employee is representing your company. You dont want him/her going into a meeting with a 3 dollar meal (....still hungry) just because that is what it would have cost him his meal if he were to bring lunch in the office. And the cost of meals differ wildly depending on where you are travelling to.
4, When you assign a task to an employee, you are supposed to give him all the resources that he needs to accomplish that task. That includes meals.

A reasonable (no one is getting fleeced or disadvantaged) meal/travel policy is always the goal.

Anonymous

(CFO)
| Jun 9, 2016

Emerson, good points. At the same time, what is the traveling employee's motivation to hold down expenses while on the road?

I understand and agree about not nickel and diming, sending them on their way with a McDonalds gift certificate and a pat on the head, but how do you get employee's to be reasonably frugal?

I've seen a one person reimbursable meals for as much as $150.

This same employee would probably never spend more than $20 on their own lunch, if that.

Then you do not have a T&E policy problem/issue but a quality of personnel and culture problem. No amount of policy will be enough if quality of personnel is an issue or if the culture tolerates it. Of course, we should not forget the need for the appropriate LEAD from bosses.

This is a culture issue as much as a policy issue. I would rather have the "conceptual" policy approach like what Netflix (and a few other tech companies) has. To the effect..."funds and expenses are to be treated as their own" or in short, USE OF ADULT JUDGEMENT.

There have been a few T&E threads here recently that recommends other specific policies or guidelines such as location dependent amounts, etc.

I actually do NOT like the term "frugal" when it comes to T&E as it may be misunderstood or misconstrued. You don't want your employees to be TOO FRUGAL, like taking an 8 hour flight with 2 layovers instead of a 4 hour direct because it is cheaper...and arriving at a meeting or conference disheveled or without sleep. Or staying in a rat infested motel (if he has not been sleeping in his rental car).

When I was out of town and engaged in a various projects - I worked late and lived out of a hotel for weeks. Shopping, preparing, cooking and storing food was simply not a practical option or allowed by most hotels so it was necessary for me to eat at restaurants, airports or food courts.

In addition, when you are out of town you are often working late and/or periodically inviting clients or associates to dinner which is a positive business development or maintenance tool that most companies encourage and will pay for.

Most importantly, many companies reimburse their employees who are out of town on business simply because it is an inconvenience and extra cost to the employee – since they are away from family, friends, home and their normal life. Having to eat at a restaurant every night, often by yourself, is expensive and not always ideal so most companies recognize this and offer to compensate for this additional expense and life inconvenience.

That again is either guideline or policy (better guideline as to eliminate exceptions hell).

In the guidelines I would say under the topic of "Meals and Entertainment" Trips that do not exceed x hours the company would only reimburse employee for business meals or something along that train of thought.

I am not a CFO, but a Sales Leader. Over the 25 plus years I have experienced various scenarios and iterations. When I worked at a large Telecom and a large Computer company, lunch was not paid for unless you went overseas where food was much more expensive , if it was a day trip or two days. However, during extended stays lunch was able to be expensed. Logic was that normally I might bring lunch from home, so it was fair. But we had strict limits of 10 to 15 dollars.

Other meals such as breakfast or dinner should be allowed to be expensed, but again depending situation. Driving a couple of hours to meet a client then home, maybe not. However, if it involved air travel or overnight stays then yes.

As a sales person who is on road more than half the year (meaning in hotels 150 nights or more) I appreciate ability to expense my lunch and other meals within reason. I consider it a "perk" of being on the road so much.

Life on the road is tough... don't nickel and dime the guys trying to generate the money.

Anonymous

(Accounting Assistant)
| Jun 13, 2016

What about when employees on the road purchase alcoholic beverages with their meals? Our travelers are on the road 3 out of 4 weeks of the month, so we want them to be comfortable when traveling, as long as it is within reason. Unfortunately, we had one employee who occasionally took advantage of this kindness. But typically, what are some standard policies regarding alcohol when on business trips?

If entertaining a client at dinner, allow them to be reasonable. If they have to be told what "reasonable" is, then explain to them it is something they need to learn as an adult-it's a judgement call. Explain to them that people who can't be trusted with T&E expenses often can't be trusted with other more important things.
#BehaveLikeAdults :)

Anonymous

(Travel Services Supervisor)
| Jun 13, 2016

Meals paid for by the employer when there is no overnight stay should be reported as taxable fringe benefits.

Regularly-provided meal money does not qualify for the exclusion for de minimis fringe benefits provided by an employer. Occasional meal money can meet an exception and be excludable, if the following three conditions are met:

 Occasional Basis - Meal is reasonable in value, and is not provided regularly or frequently
 Provided for Overtime Work - Overtime work necessitates an extension of the employee's normal work schedule
 Enables Overtime Work - Provided to enable the employee to work overtime.

Meals provided on the employer’s premises that are consumed during the
overtime period, or meal money expended for meals consumed during that
period, satisfy this condition. Reg. §1.132-6(d)(2)

If meal reimbursements are provided as part of a company policy or union contract, they are not excludable as de minimis benefits, because the benefit is required and is not occasional. The employer would normally have the opportunity to set up the administrative procedures for reporting the benefit, so accounting for it does not meet the “administratively impracticable” standard for de minimis benefits
.
Meal money calculated on the basis of number of hours worked (for example, $5.00 per hour for each hour worked over 8 hours) is never excludable as a de minimis fringe benefit. Reg. §1.132-6(d)(2)

T&E policies seem to generate a lot of heat in these discussion boards, presumably because they depend a lot on discretion and almost everyone has a different perception of what's reasonable.

To my mind this is a two step process: first, is there a business justification why the company should pick up the tab not the employee; second, is the amount spent commensurate with the business justification. This is not necessarily the same as: is the employee incurring more cost than they normally would? If I send an employee abroad I would pick up their necessary business expenses even if, by staying in a hotel, they are saving on electricity/ gas/ internet/ food costs at home.

I've known employees be extremely careful not to incur unnecessary costs and others who think they've hit the jackpot when they're given a corporate credit card. The most important thing for me is that the rules are agreed up front and not left till after the costs have been incurred.

"... even if, by staying in a hotel, they are saving on electricity/ gas/ internet/ food costs at home."

This is absurd in almost all cases. Saving money on internet? Surely when an employee travels for a, say, 10 days, they will not cancel their home internet service. The 'savings' on electric and gas costs will literally be pennies a day.

When your employees travel for you, don't punish them by expecting them to cover their extra costs.

Mentioning how much employees are saving (whatever costs the employee might have) is MISSING the point entirely of why the company should shoulder reasonable T&E expenses.

It is like a cell phone plan .... I cringe when I hear companies say...."Well, you are spending $40 bucks for your personal plan anyways, so we will just plug in the other $20 or so bucks. That is just not right. You give them a separate phone and plan. If the employee doesnt want to have 2 phones....then it is HIS choice....not the company's.

My guiding philosphy has always been.... DO NOT try to save $$$ on the backs of employees.

Anonymous

(Tax & Regulatory Consultant)
| Jun 13, 2016

Richie, are you going to buy them all a YETI for their car to keep their lunches from home either hot or cold, when they travel by car?

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